China slowdown won't have much impact on India, says Finance Secretary TV Somanathan

economictimes.indiatimes.com:

India and the government will continue its capex push, finance secretary TV Somanathan said. On the fiscal deficit, he said the government will not exceed the budget estimate of 5.9% of GDP. «So far as China is concerned, the very fact that we have a huge trade deficit with China means that China's slowdown has very little negative effect on the Indian economy,» Somanathan told ET in an interview.

China's economic activity data for July, released Tuesday, including retail sales, industrial output and investment, came in much below expectations, fuelling concerns over a deeper, longer-lasting slowdown in growth. Five major brokerages Friday cut China's economic growth forecast for the year as worries mounted over contagion from debt repayment troubles at its top private property developer Country Garden. Somanathan said the government will continue with its capital expenditure push.

The February budget steeply raised the capital expenditure outlay by 37.4% to ₹10 lakh crore from ₹7.28 lakh crore in FY23 to ramp up growth. Asked if there could be a shift to revenue expenditure instead of capex because of impending general elections in 2024, he said the government will provide budgeted funds that any ministry requires. «Capital expenditure will continue to be a priority,» he said.

«Whatever we have planned for, in terms of the capex, will not be impacted because of the elections. The only question will be ability to spend — we have a clear policy.»Import curbs The government expects robust capital spending in the April-September period. «In the first half, the offtake is going to be very good,» Somanathan said.